Tools
Growth in short run, niche leader in long
run
Textbox
Frame
Risks
Export
Vertical
Goal
Text
ABC
Circle
✓
X
Takeaway
1
6% CAGR
Analysis | 1. Enter | 2. Collaborate | 3. Milk | Financial Feasibility | Timeline
March 16th, 2013
Presented to:
By: Dominik Bundschuh, Kim Graves, Amelia Lak and Helge Ratvik
Lauren Bruce – Pia Ghosh – Andy Nesta – Tim Tong
Cirque du Soleil
Presented to Daniel Lamarre
CEO and President of Cirque du Soleil
March 13, 2008
JDRC Consulting
History
Key Challenge
Recommendations
Financial
Ready, Steady, Grow
Presented to Bjorn Magnusson
By Jedi Consulting
History
Key Challenge
March 4th 2011
Recommendations
Financial
March 1st, 2013
Presented to:
By: Lauren Bruce, Andy Nesta, Pia Ghosh and Tim Tong
Executive Summary
Mission
to India
Fonterra needs to develop a strategy to break into the Indian market
both short-term and in the long-run, while accounting for key players
Questions to
consider
How do you establish
brand presence in
India?
How do you
minimize industry
and government
reluctance?
How do you match
lack of supply and
growing demand?
Strategy
Break into India with
non-cooled products
Co-ownership of
plant with IFFCO in
Nellore
Develop own
production in the
long-run
Where you
want to be
Capture a maximal market share in the rapdidly growing, largest dairy
market in the world
Analysis | 1. Enter | 2. Collaborate | 3. Milk | Financials | Timeline
7
Vision for Expansion
Vision:
Milk India’s
true potential for Fonterra
Break through
rapid entry
Strong brand
presence
Analysis | 1. Enter | 2. Collaborate | 3. Milk | Financials | Timeline
Leverage
expertise in
production and
processing
8
How can you overcome these burdens?
We need a solution that….
To account for all these barriers and capture a maximal piece of the pie,
your strategy needs to fulfill several requirements:
Rapid
entry
Strong
brand
presence
Local
support
Reliable
supply
chain
Breaking into the Indian market with strong brand
presence and local support will secure Fonterra in a
favorable and competitive position
Analysis | 1. Enter | 2. Collaborate | 3. Milk | Financials | Timeline
9
Generation
2010
Fuel Breakdown
Biomass
Gas
Oil
Coal
2040
16%
Need a solution that is:
Clean
31%
Reliable
Profitable
19%
Scalable
34%
Biomass
67%
Gas
33%
Need a clean, reliable, profitable and renewable solution to achieve 2040 vision.
Analysis
Alternatives
Recommendation Implementation
Decision Criteria
Clean
Reduce CO2 and other emissions
Reliable
Flexible to match volatile demand
Profitable
Financially feasible
Scalable
Not depleted by use
Scalable to match increasing population
Analysis
Alternatives
Recommendation Implementation
Recommendation
3
2
1
Enter with
non-cooled
products
• Rapid market entry
• Establish brand
presence
• Simplified channel
system
Right now
Collaborate to
form a coownership
plant with
IFFCO in Nellore
• Government and
industry support
• Positive perception
2 - 5 years
Milk the market by developing
autonomous production,
processing and distribution
channel system in the long run
• Permanent
establishment as a strong
market player in India
5 years onwards
Analysis | 1. Enter | 2. Collaborate | 3. Milk | Financials | Timeline
12
Why enter with non-cooled products
How?
Export
Quick implementation
Low resource commitment
Who?
Middle Class
Urban agglomeration
Purchasing power
Where?
Urban centres
Easier initial distribution system
Product?
Premium powder
Less time-sensitive supply chain
Analysis | 1. Enter | 2. Collaborate | 3. Milk | Financials | Timeline
13
Choosing cities to target middle class
Goal: gain rapid entry and establish brand presence
Indian Cities
Within top 10
biggest
Within top
10
wealthiest
Near the
coastline
Rank
Chennai
✓
✓
✓
1
Pune
✓
✓
✓
2
Delhi
✓
✓
Punaji
✓
✓
Greater Mumbai
Mumbai
✓
4
✓
5
✓
6
✓
Chandigarh
Bangalore
3
✓
Analysis | 1. Enter | 2. Collaborate | 3. Milk | Financials | Timeline
7
8
14
Choosing the airports for travel retail expansion
Top European Airports
Total Airport
Traffic (2012)
Traffic CAGR
%
Retail EUR
/Passenger
Rank
(mm)
(2010-2012)
(2012)
Paris/Charles de Gaulle
60.7 (2)
5% (2)
4.15 (2)
1
London/Heathrow
69.4 (1)
4% (3)
3.71 (4)
2
Amsterdam/Schipol
49.7(4)
6% (1)
6.17 (1)
3
Frankfurt/Main
56.3 (3)
3% (4)
3.63 (5)
4
Munich
37.6 (6)
3% (4)
3.89 (3)
5
Madrid/Barajas
49.5(5)
-8% (5)
3.53 (6)
6
Roma
37.4 (7)
Na
1.24 (7)
7
Weight
50%
25%
25%
100%
Charles de Gaulle, Heathrow, and Schipol are the most attractive airports for Toms to reach
the widest international audience.
Analysis Recommendation Implementation Results
Short-term strategy
A B C
Idea in brief:
• 3 year membership program
• All access card to attend Cirque shows worldwide
• Price: $700
Impact on company
• Increase in occupancy rates
• Increase in loyalty
• Subsequent increase in profits
Metrics for success:
• 90% occupancy within two years
• Increase in profits by over 10%
• Sell pass to 8% of current visitors
• Increase revenues for MGM
History
Key Challenge
Recommendations
Financial
A brief history
Revenues
A B C
1980
1984
1987
future
Le Grand Tour du Cirque du Soleil was a pivotal point in the
company’s history
History
Key Challenge
Recommendations
Financial
The Generosity Card
The Generosity Card Value Proposition
Compel
guests
Q1
Incent card
usage
Q2
Q3
Q4
X
X
Source: Paytronix, 2010
Financial
goals
1. Offering a free Welcome Generosity gift to
entire customers to join loyalty program.
2. Year-round automated rewards scheme. €5 gift
for every €100 spent.
X
X
X
X
Effective
execution
X
X
X
3. Limited time offer seasonal promotions
during holidays.
3. Limited time exclusive offers for high
loyalty/high profit customers.
Analysis Recommendation Implementation Results
Moving into new markets
Largest impediment to international growth is
low bargaining power with distributors
Use data to eliminate the barriers
Unknown geographical
market demand
Distributors don’t know
Toms’ brands
Use push tactics in markets with high
likelihood to buy
Use data as evidence of customer
loyalty in negotiations
Increase the likelihood of success in international
expansions by correctly applying data
Analysis Recommendation Implementation Results
Prorated first year financial results
Variable Costs
Incremental
Revenue:
DKK 39.7 Million
6%
42%
Fixed Costs
26%
15%
4%
Revenue
EBIT
COGS
Promotions Airport
Retail
Space
Other Costs
1%
In-store Loyalty
experience Card
Launch
7%
Customer
Loyalty
Costs
Analysis Recommendation Implementation Results
Resulting financial strengths and synergies
Travel retail
Availability
Sampling strategy
Preference
Generosity Card
Loyalty
Ad Campaign
Awareness
Experience store
Familiarity
Affordable luxury
Personality
Fun, Danish, Luxury
Associations
Units
Incremental Revenue
Incremental Costs
Incremental Profits
Thousand DKK
Increased
sales in
travel
retail
More
loyalty
cards
Toms’ strategies form a positive
feedback loop which can achieve
scalable growth
2013
19847.8
18143.6
1,704.1
2014
46,485.9
39,701.6
6,784.3
2015
53,414.5
38,329.5
15,085.0
2016
60,485.4
42,352.8
18,132.6
2017
67,703.0
46,459.6
21,243.4
The total 5 year NPV of the travel retail and loyalty programs is DKK 44.1 Million
Analysis Recommendation Implementation Results
Pros and Cons of Toms Sales Channels
Indirect
Direct
CONS
PROS
Boutique
Stores
-Full control
over sales
displays
- Gives
consumers
the full
experience
- High fixed
costs
- Unproven
revenue
generation
Online
Traditional
Retail
Travel
Retail
Exports Standard
Exports Tailored
-Low capital
investment
-Widespread
reach
-Large
volume
- Targets
desired
segments
-More
accommodat
ing sales
displays
- “Traveller
exclusive”
-Widespread
reach
-Exposure to
world’s
largest
retailers
-Little
leverage of
brand equity
- Misses
impulse
nature of
chocolate
- Low
bargaining
power with
customers
- Little
consumer
insight
- Limited
ability to be
frequent
customer
-Low volume
-Standard
batches
-Limited in
scope
- Require
large orders
Timeline for Action
A
1994
2008
2010
2012
2014
Las Vegas
United
States
Macao
China
&
Tokyo
Japan
Dubai
Middle
East
London
Europe
Singapor
e
SE Asia
B
C
• Partnerships with Las Vegas Sands and Dubai World
• Sold 20% equity stake to Dubai investors
Cirque has already begun expansion efforts abroad while
forging select partnerships
Finding partnership in London comparable
to MGM’s Profitability?
Historical IRR
Capital needed
16%+
$100-200M
Value proposition
to funders:
 High return on capital
 Strong history in
London
 Opportunity to be first
hub in Europe
History
Key Challenge
A B C
Partnership options:
• Official City of London
funding
Top Choice • London Cultural Olympiad
• Major Hotel Chain
• E.g. InterContinental, Ritznd
2 Choice
Carlton
• Private Investor
3rd
Choice
Recommendations
Financial
Leveraging the ability to test markets
Travel Retail
Export Market
• Develop customer loyalty
• Create brand awareness
• Uncover customer data
• Direct market access
• Small commitment
• Market testing
Traditional Retail
• Established presence
• Stable revenue
• Frequent customer
touch points
6% CAGR
Toms has the ability to use each sales method as a testing platform to make
successive steps towards becoming a more integrated international player
Analysis Recommendation Implementation Results
Recap
Step 1: Non-cooled products
Question
Solution
Outcome
How will you
establish brand
presence in the
short-term?
Export non-cool
products to the
middle class
Middle class
familiarization and
adoption of Fonterra
products
Analysis | 1. Enter | 2. Collaborate | 3. Milk | Financials | Timeline
26
Win-win through co-ownership
Fonterra
•
•
•
•
Avoid tariffs
Access to farmland
Gain consumer knowledge
Large scale market entry
with shared risks
Co-op
• Pooling of technology
• Reliability in product
quality
• Gain education to improve
profitability and
productivity
Entry barriers can be reduced through government
and industry support
Analysis | 1. Enter | 2. Collaborate | 3. Milk | Financials | Timeline
27
Co-ownership
Pros
• Pooling of Resources &
knowledge
• Large-scale market entry
without high risk
• Avoidance of import tariffs
• Lower foreign exchange risk
• Stronger government
support
Cons
• Shared profit
• Investment cost
• Lack of complete control
increases quality risk
• Limited flexibility
• Politicking with other
owners
28
CONTROLING BRAND IMAGE
TRADITIONAL
“REAL BEAUTY”
Unilever’s Brand
Management Team
Unilever’s Brand Management
Team
Dove Brand Image
Dove Brand Image
Consumers
Consumers
Consumers
Consumers
With Internet as a marketing channel, Unilever can no longer have
full control over Dove’s brand image
How will you deal with corruption?
Risks
Mitigation
Severity
Medium
Corruption
Likelihood
Ensure strict process
controls, working
with all levels of
government
Medium
30
Risk of Uncooperative International Retail Stores
Risk
International Retail Stores refuse to allow Toms to increase
retail space
Impact
Loyalty Program: Smaller rollout
Travel Retail Sales: Same as before
Anthon Berg Brand: Uncertain
Mitigation
Move to the next most
attractive airport
Consider sharing a 2.5%
spread in margin
Educate Nellore’s farmers
Educate farmers on
On-farm
management skills
Milk quality
Productivity
Indian Farmers
Fertiliser Cooperative
Limited:
• 40,000 farmers
Stronger acceptance
32
Controlling the value chain
Dairy supply
Plant
Cold Star
Systems
Large retailers
Government
Approval
Warehousing
Push towards
middle class
Build Plant
Strong city
connections
Premium
positioning
IFCCO farms
Feasibility
Study
Own farms, if
needed
National milk
quality standards
Retail
Distribution
Analysis | 1. Enter | 2. Collaborate | 3. Milk | Financials | Timeline
33
Where the Outputs Go
2. How it works
Solid Fuel
Biogas
Fertiliser
Recycled
Products
Transportation
Method
Land transport
Pipeline
Solid Transport
Solid Transport
Channel Partner
Severn Power
Station
Severn Power
Station
FCC
Environment
FCC
Environment
Destination
CHP Plant
CHP Plant
External Site
External Site
Analysis Recommendation Implementation Results
An acquisition strategy would favour competitors
Opportunities to expand through:
Acquisitions
Organic Retail Growth
Trend of consolidation among
confectionery producers bid up prices
Suitable acquisitions are scarce
Acquisitions force Toms to fight
a battle it cannot win
Recent 2012 acquisitions
compromises financial flexibility
Without deep pockets like its competitors, Toms’ 5 year strategy cannot purely rely
on acquisitions
Analysis Recommendation Implementation Results
Detailed analysis of H&M’s
competitive positioning
Internal
External
Things to leverage
Things to mitigate
Strengths
Weaknesses
• High international brand awareness
• High ROIC (35%) to sustain constant new store
investment
• Diversified brand portfolio with high growth potential
• Strategic partnerships with high profile designers
• Sales stronghold in Western Europe
• Top 12 organic brand – focus on green initiatives
• Consistent customer experience and uniform branding
across all markets
• Lease locations to enable flexibility
• Experienced, talented employee pool
• Weak position in high-growth Asia Pacific markets
• Lack of integration across offline and online channels
• Product cycles that are 5x longer than best-in-class
benchmark
• Lack of coordination in competitor identification
• Lack of recruiting strategy for business students
Opportunities
Threats
• Trends of trading up and trading down – disappearance
of the middle market
• Growing importance of expression and individuality in
clothing choice
• Growing popularity of e-commerce and online brand
interaction
• Demand for innovation in product dev’t
• High growth in menswear and accessories
• High growth in Asia-Pacific markets
• Growing trend for sustainable products
• Low switching costs and low brand loyalty in retail
industry
• Mature to declining growth in Western Europe and North
American markets
• Vertical integration of competitors decreases their lead
time and cost pressure
• Barriers to entry are low for new designers
Source: BCG analysis, Team Jedi analysis, H&M annual report 2009
36
What does the recommendation accomplish?
3
Take Off
International
Grow Anthon Berg in travel retail markets
while preparing for international, traditional
expansion in the future
2
Chart your course
Loyalty program
1
Build the foundation
Capture the travel retail space
Goal
• Use loyalty programs
• Gather customer data
• Leverage Toms’ existing
brand equity in Anthon Berg
• Use International travel
Retail Stores
Growth in short run, niche leader in long run
Analysis Recommendation Implementation Results
Consolidation a result of highly competitive industry
Suppliers
• Supplier size and independence
• Quality control
• Switching cost
Buyers
• Direct to consumer
• Indirect (eg. through a parent)
• Available information about
attributes
Rivalry
• Highly fragmented industry
• Experiencing consolidation
Threat of new entrants
• Low cost of entry
• Suppliers accessible
• Low IP involved
Unattractive market force
Substitute products
• None
• (non-branded clothing)
Attractive market force
Implementation Timeline
Months
0
3
Preparing for expansion
Secure debt or
internal financing
Negotiate with
channel partners
Submit Environmental
Impact Assessment
Construction and beyond
Break Ground in
Severn Power
Complete 1st
commercial plant
Reduce natural gas
inputs
Seek additional
landfills and expand
construction
6
9
12
15
18
21
24
27+